After Putin's visit to China, what comes next?

By most accounts, President Vladimir Putin’s visit to China was a strategic success. However, greater Russian-Chinese cooperation in the economic sphere also comes with the risk that Russia could be pulled into a number of new geopolitical disputes along its Asian borders.

Vladimir Putin and Xi Jinping in Shanghai. Photo: Reuters

Not surprisingly, political and geopolitical issues dominated the agenda in Shanghai this week, where Russian President Vladimir Putin walked away with a major win – in the form of a 30-year, $400 billion deal that made the front pages of major Western newspapers like the New York Times. Amidst continued tensions over Ukraine and the steep decline in Russian-Western relations, Russian and Chinese leaders underlined in a joint statement that both states have similar positions on key global issues.

So does this new round of cooperation between Russia and China portend a major change in global affairs?

Moscow and Beijing have expressed their common position that state sovereignty is a key value in the international arena today and that neither Europe nor any other international community should try to impose its values or interests on independent non-Western states. This includes sanctions as well as any type of involvement in their internal affairs – such as the support of the political opposition.

It is well known that the Russian economy is extremely dependent on the export of raw materials to European markets. As a result, the Kremlin should take into account European attempts to diversify its imports, especially of natural gas, as a way to decrease its dependency on Russia.

Of course, if Europe is trying to guarantee its energy security vis-à-vis Russia and wants to achieve the situation where Russia will be unilaterally dependent on its exports to Europe, it only makes sense that Russia should also increase its energy security by diversifying export destinations. The only way to diversify Russian energy exports is to develop contacts with East Asian markets, especially the Chinese market.

Another important strategic task both for Russia and China is cooperation in Central Asia, where non-traditional security challenges will only grow after the withdrawal of international troops from Afghanistan.

China has formally neutral (and, in essence, a semi-friendly) position towards Russia on the Ukrainian crisis. Given the dire economic situation in Crimea, the value of Russian-Chinese cooperation for the Kremlin only increases. For example, in December 2013 ousted Ukrainian President Yanukovych signed an investment agreement with China for the construction of a deep-sea port in Crimea.

Additionally, the two sides agreed on some other investment projects for the peninsula. Now all of these agreements should be thought of as Russian-Chinese agreements. China has also proposed construction of a bridge through the Kerch Strait, which is of vital importance since Russia now has no direct railroad or highway access to Crimea.

During Putin’s visit, important agreements on cooperation in the military sphere between Russia and China were also discussed. Common military exercises of Russian and Chinese navies have been conducted and new military exercises are planned for the future.

In 2012, Russian armament supplies to China reached 12 percent of total Russian arms exports. In March 2013 Russia and China signed a framework agreement on supplies of 24 SU-35 warplanes and 4 Lada submarines. There are also plans to increase cooperation in the sphere of weapons exports. China can now purchase Russian S-400 air-defense systems as well as IL-76 and IL-78 military airplanes.

The economic aspects of the talks had to underline that Russia has alternative markets, just in case the U.S. or the EU introduced a new round of far-reaching economic sanctions. No doubt, the signing by Russia’s Gazprom and China’s CNPC of a 30-year, $400 billion contract on gas supplies to China through the eastern pipeline “The Strength of Siberia” was a key economic agreement.

Critics both in Russia and the West have mentioned that the price of the contract is much lower than the price it would have commanded in the European market. However, the contract provides for the development of the infrastructure of Siberia. Development of Siberia and the Russian Far East is a key unsolved strategic task of Russia. The market has positively assessed this contract and the price of Gazprom shares in the stock market increased significantly after the announcement of the agreement.

Critics, especially Western ones, underline the risks of a Russian-Chinese strategic partnership. Russia has an unfavorable balance of trade with China, and risks potentially slipping into the position of being just a raw materials supplier for China.

Moreover, the price of natural resources, especially, natural gas, in China is much lower than in Europe. Russia, due to its strategic connection to China, can now be involved in territorial disputes and strategic rivalry between China and its neighbors, including Japan, South Korea and India.

There is also potentially the very dangerous unsolved “Taiwan problem.” Growth of Chinese nationalism is also a potential threat for Russian territorial integrity.

Finally, within the new Chinese “Silk Road” strategy, there is a tendency toward a growing Chinese influence in the post-Soviet space. There is a real problem of how to reconcile this Chinese influence with Putin’s strategic vision of Eurasian integration. Most clearly, this problem is visible now in the case of Kyrgyzstan.

Russian experts do not deny these potential risks. Putin has underlined that Russia is not going to become a member of a Russian-Chinese military and political alliance. So, Moscow has saved some space for foreign policy maneuvering. However, from the point of view of the Russian political elite, at the present time the benefits of Russian-Chinese cooperation outweigh the potential risks of it.

The opinion of the author may not necessarily reflect the position of Russia Direct or its staff.